Start a Business in Europe in 2022
Given the current state of the economy in Europe which includes slow growth & political instability of every kind, BREXIT fallout, etc. This is not the moment to begin your business.
However, the majority of Europe is known for its slow growth in good times, although there are still chances to establish your business in Europe If you’re aware of the realities and obstacles.
One of the main things to keep in your mind is the fact that each European state has rules and laws for foreigners who are not part of the EU and are looking to establish the foundation of a business.
The unemployment rate is still high in many European countries. This means you need to provide self-sustaining income or the creation of jobs for other people to overcome obstacles to gain approval to begin your own company across Europe.
So, without any further ado let’s get jump into the article to know more about various things before planning to start a business in Europe.
Requirements for Setting up a Business in Europe
Despite the different laws regarding permits for business for foreigners, there’s one law that most European nations possess, those who are planning to establish businesses do not require an employment permit or other kind of visa.
They just require a residence permit in the nation where they are planning to establish their business. These permits are for a limited time initially but after a few years, based on the growth of your business it is possible to secure a long-term residence permit.
There are many kinds of companies which you can start to be eligible for a residency permit. You can establish your company as a sole trader, an association with a branch or office of a foreign business, or even a company that is registered in the country you are hosting.
If your business or self-employment activities are likely to contribute significant contributions to the economics, culture, and/or sciences of your destination There is a small chance that your application will be approved and that you’ll receive a residency permit.
To obtain an immigration permit for setting up a business, certain countries require a business plan which is then reviewed by immigration and labor officials to determine if the plan meets the requirements of the nation.
In the end, the business plan you submit must demonstrate that you intend to invest in and offer services that satisfy demand in the nation of your choice. Certain countries require you to demonstrate a certain amount of funds to finance the start-up.
If you are planning to establish a company within the UK (pre & post-departure) such as you must have a minimum of $50,000 to invest in your venture and additional money (200,000 dollars) to help you and your family until the business becomes profitable.
Getting a Residency Permit to Start a Business in Europe
With the constant expansion of the European Union (now at 28 members) the situation is getting increasingly difficult for residents of countries that are not part of Europe to get a residence permit to begin an enterprise.
This is partly because the EU stipulates that every citizen of its member states be treated the same as citizens of the country. For instance, the Greek businessperson who starts a new venture in France can avail of the same services, support as well as training, and loans in the same way as a French citizen.
Therefore, there is less need for entrepreneurs and business people from outside of Europe to develop new ideas, services, and products. While the general business environment isn’t particularly welcoming to non-Europeans, every EU member nation has its own rules for the residency requirements for businesses.
Below is a summary of the requirements for obtaining residency in Europe’s most sought-after destinations for expatriates.
Belgium
Foreigners who want to establish businesses or become self-employed or a freelancer requires a professional license that allows them to conduct their business in Belgium. It is possible to demonstrate your credentials and prove your success in your profession for the card to be issued.
It is also necessary to prove that you have enough funds to finance the start-up of your business and to support yourself. In order to start a business or to pursue self-employment in Belgium, you must join the Banque-Carrefour des Enterprises (BCE) an official business registry for small businesses and self-employed.
Denmark
Foreigners who are from outside of Europe can start a business or start a self-employment business in Denmark subject to the fact they meet certain requirements.
There should be specific Danish commercial interests associated with the establishment of your company in Denmark as well as be able to prove that shows you have sufficient funds to run your company.
Being a self-employed individual, you’ll typically be granted a residence permit for a year, with the possibility of an extension. After two years of residency, it is possible to obtain the right to reside for an extended period of duration.
Poland
Poland is an official participant in the European Union and is located in the eastern part of Germany. Poland allows temporary residence for business owners who wish to set up a business within the country.
It is essentially required for the investor to establish an activity for business and show that they earn at least 15,000 EUR in annual income to be eligible to be granted a temporary residence permit.
Multiplying the 15,000 EUR income could result in the issuance of more residence permits temporary for investors. Investors can make investments in the real estate sector as a way to earn money. After three years of holding an interim permit, the person can apply for permanent residency in Poland.
Polish passports are among the best in Europe. Polish passport is among the top passports worldwide, offering visa-free entry into the U.S. and freedom of movement within and around the European Union.
Read More: Establish your business in Poland
France
In order to facilitate the residency permit process for self-employed foreign professionals, The French government has established “Skills and Talents,” also known as the “Skills and Talents” permit ( Competences et Talents) is a brand new program that allows people who could contribute to their nation.
This “Skills and Talents Card” for self-employed individuals allows people who are not from Europe to start an enterprise or become expert independent professionals. If you’re in this category, you do not require to accept a job offer. All you require is to show exceptional professional abilities and have enough money to begin.
Ireland
If you want to start a business in Ireland you will require permission for business from the Department of Justice, Equality and Law Reform. To be eligible for this Entrepreneur program, you have to invest at least 75,000 euros & have the potential to hire 10 employees in those in the European Economic Area.
In addition, you have to demonstrate your ability to run your business, & then submit an outline of your business plan accepted by an accounting company.
Germany
Foreigners who plan to start an enterprise in Germany are able to obtain residence permits if there is a strong economic or regional need, provided that the business is expected to have an impact on the economy and the financing is guaranteed.
Entrepreneurs who are self-employed from outside the country may gain access if their business is profitable and their income is secure and, if they’re more than 45 proof is presented that enough income is available for the necessities of “old age”.
Netherlands
Self-employed entrepreneurs and entrepreneurs are not required to have an employment permit in the Netherlands However, they must have the authorization to live in the country as self-employed individuals.
To be capable of such a license, they must verify that your enterprise is an optimistic supporter of Dutch society, and/or the Dutch economy.
Rather of a work license, you should cite for a living permit & submit information about your firm plans, stuff along with start-up wealth & your motive to immerse in self-employment. If you are self-employed or a firm proprietor, you should enroll as a business in Netherlands.
Spain
Countries outside of the EU who wish to start a self-employed business or create an enterprise must obtain an identity card to be legal to reside as well as work legally in Spain.
The residency application can be approved if you prove that you have the funds to begin and that your business can financially assist your needs. It is also necessary to prove that you meet the requirements required to manage your company.
Sweden
Foreigners who are not from the EU/EEA region who wish to start a business or business partnership in Sweden first require a residence permit in order legally reside in Sweden. Similar to other EU countries working permits are not needed in this situation.
In order to get your residence permit approved, you must be the owner of at least 50% of the company, and you must prove that the company is profitable and it will be able to support your family and you.
It is also necessary to prove that you have the necessary experience in the field, and have the necessary qualifications to manage your business in addition to having the capital to begin.
United Kingdom
If you are planning to set up your business in the UK then you must have a minimum 200 000 pounds to invest in your company in addition to additional funds to provide for yourself and your family members until your company becomes profitable.
In addition, you need to be a shareholder or have an equally-shared interest in your company (in the event of the case of a partnership), you need to be fully involved and you are not able to apply for public assistance or take the position of a worker while running your business.
The UK also demands that two new permanent jobs that are full-time for UK citizens or residents of the UK be created by your company.
How Easy is it to Set Up a Business?
There are many studies by major international organizations like the World Bank that regularly evaluate the business-friendly environment of nations around the world.
The Bank’s Ease of Doing Business Index project provides objective measurements of business regulations as well as their application across 190 countries and select cities across the globe.
The report outlines some requirements that are essential for business operations like beginning a business and dealing with construction, hiring workers, registering properties as well as obtaining credit and making payments for taxes, transacting across borders, enforcing contracts and more.
In the report for 2018 by the World Bank report, the top-ranked European nations are
- Denmark (#3)
- Norway (#7)
- UK (#9)
- Sweden (#12)
- Finland (#17)
Other large economies in Europe are ranked a bit lower
- Ireland (#23)
- Germany (#24)
- Austria (#26)
- Spain (#30)
- France (#32)
- Poland (#33)
- Czech Republic(#34)
- Portugal (#36)
- Switzerland (#38)
- Switzerland (#45)
- Italy (#51)
How Competitive is the Business Environment?
Another popular indicator that is frequently used Global Competitiveness Report which is released every year through the World Economic Forum.
Relying on the explanation of the World Economic Forum it is the Global Competitiveness Report “specifies impediments to development & thereby assists the growth of pertinent techniques to accomplish sustained economic growth.
Its Country Profile Highlights provide an outline of the positive aspects of each nation’s economy. Sweden, Finland, and Denmark for instance are all listed as among the top 17 nations for macroeconomic stability and stability.
They also have good budget surpluses as well as low amounts of public indebtedness. Germany however, on the contrary, is listed as the top in the world for its quality of infrastructure, specifically communications and transportation.
France is also praised for its great infrastructure particularly when it comes to communications, transportation, and energy.
Economic Freedom
The political conservatism Index of Economic Freedom is a collection of economic indicators that are published each year through the Heritage Foundation.
The index explains, “Economic liberty is the primary right of all human beings to prevail in restraint of their job as well as property. In an economy-free society, citizens have the freedom to work and produce, consume and invest however they choose.
The report ranks 186 nations around the world. Surprisingly, the top-ranked European countries are
- Switzerland (#4),
- Ireland (#6)
- UK (#7)
the only European country to be included in their top 10 (interestingly, Canada is ranked at #8, and Canada is listed as number 8 while the U.S. is ranked #12).
Corruption, Cronyism, Organized Crime, and many other Woes
Corruption is a fundamental aspect of business in several European countries. However, the majority of European countries have a very little or moderate degree of corruption that doesn’t significantly hinder the running of a successful business.
Clarity International’s Corruption Perceptions Index (CPI), a yearly disclosed analysis of corruption around the world can be utilized to assess how much corruption affects everyday life, politics, and the economy of 180 countries across the world.
It is the Corruption Perceptions Index (CPI) is a “survey of surveys”, that depends on 13 several experts’ calculations as well as business-related analyses.
The 2019 rankings exhibit that in common Scandinavian as well as Central European nations possess very low levels of corruption, according to an autonomous CPI:
- Denmark (#1)
- Finland (#3)
- Sweden (#4-tie)
- Switzerland (#4-tie)
- Norway (#7)
- Netherlands (#8)
- Luxemburg (#9-tie)
- Germany (#9-tie)
- Iceland (#11)
- UK (#12-tie)
- Austria (#12-tie)
- Belgium (#17)
- Ireland (#18)
- France (#23)
In 2019, there are a few southern European countries are on the contrary according to The report that corruption is a greater number of countries, which include:
- Portugal (#30)
- Spain (#30)
- Cyprus (#41)
- Malta (#50)
- Italy (#51)
A lot of Eastern or South-eastern European countries also rank relatively low in the corruption index of the report:
- Estonia (#18)
- Poland (#41)
- Slovenia (#35-tie)
- Lithuania (#35-tie)
- Latvia (#44-tie)
- Czech Republic (#44)
- Slovakia (#59)
- Greece (#60)
- Croatia (#63)
- Montenegro (#66-tie)
- Romania (#70-tie)
- Hungary (#70-tie)
- Armenia (#76)
- Turkey (#91)
- Serbia (#91)
It is also fascinating to observe that a handful of the ex-Soviet Republics located in Eastern Europe have been given some of the highest corruption indexes around the globe, as per an independent study:
- Belarus (#70)
- Bulgaria (#74)
- Kosova (#101-tie)
- Bosnia and Herzegovina (#101-tie)
- North Macedonia (#104)
- Albania (#106)
- Ukraine (#126-tie)
- Kyrgyzstan (#126-tie)
- Russia (#137)
- Turkmenistan(#165)
Europe's Leading Business Cities
Cushman & Wakefield, a privately owned commercial real estate firm, is the publisher of its European Cities Monitor which is an annual study of the major European business centers that is based on information and evaluations from 500 top European firms.
London has maintained its top spot since the inception of the survey in the year 1990. These are the top 10 European most renowned business cities:
- London (#1)
- Paris (#2)
- Amsterdam (#3)
- Berlin (#4)
- Frankfurt (#5)
- Copenhagen (#6)
- Munich (#7)
- Dublin (#8)
- Milan (#9)
- Vienna (#10)
Conclusion
However, keep in mind that the factors that make London, Paris, and Frankfurt appealing to Europe’s top companies may not be the same for smaller companies or new start-ups.
It is essential to assess the requirements of your business or beginning before you place your trust in any one of the studies or research studies mentioned within this piece.
If you’re still having questions regarding the starting of a business in Europe or any other topic, we are ODINT Consultancy here to assist you at each step of your way.
FAQ’s
Denmark has been the first country in the world to be ranked for business-friendliness in the World Bank in Europe – and quite rightly so.
It is possible to form an EU firm directly with the authorities, or via the online registration for companies within the Europe system.
Despite the various laws on permits for foreign-owned businesses, however, there is a common rule the majority of European countries have in common: foreigners intending to start a business don’t require a work permit or any other visa.
Hungary is home to one of the lower corporate taxes in Europe and is taxed at 9 % of earnings from corporations. Local business taxes are payable to the municipalities, but the amount varies and is only allowed to be 2% of the net sales revenue.
In the year 2020, it was reported that the World Bank ranked eight European countries on its top 20 rankings for “Ease of doing business ranking” therefore there are many options for you to consider.